Correlation Between KDA and PowerOf Canada

Can any of the company-specific risk be diversified away by investing in both KDA and PowerOf Canada at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining KDA and PowerOf Canada into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between KDA Group and Power, you can compare the effects of market volatilities on KDA and PowerOf Canada and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in KDA with a short position of PowerOf Canada. Check out your portfolio center. Please also check ongoing floating volatility patterns of KDA and PowerOf Canada.

Diversification Opportunities for KDA and PowerOf Canada

0.02

Correlation Coefficient

KDA  PowerOf Canada

Significant diversification

The 3 months correlation between KDA and PowerOf is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding KDA Group and Power in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PowerOf Canada and KDA is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on KDA Group are associated (or correlated) with PowerOf Canada. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PowerOf Canada has no effect on the direction of KDA i.e., KDA and PowerOf Canada go up and down completely randomly.

Pair Corralation between KDA and PowerOf Canada

Assuming the 90 days horizon KDA Group is expected to under-perform the PowerOf Canada. In addition to that, KDA is 3.76 times more volatile than Power. It trades about -0.03 of its total potential returns per unit of risk. Power is currently generating about 0.19 per unit of volatility. If you would invest  4,469  in Power on December 28, 2024 and sell it today you would earn a total of  644.00  from holding Power or generate 14.41% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

KDA Group  vs.  Power

KDA Group

Risk-Adjusted Performance

Very Weak

Over the last 90 days KDA Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

PowerOf Canada

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Power are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, PowerOf Canada displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with KDA and PowerOf Canada

The main advantage of trading using opposite KDA and PowerOf Canada positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KDA position performs unexpectedly, PowerOf Canada can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in PowerOf Canada will offset losses from the drop in PowerOf Canada's long position.

The idea behind KDA Group and Power pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

Check out your portfolio center.

Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.